Getting an agricultural land loan requires a wealth of information, and it is invaluable for a borrower to know what a lender is looking for. AgAmerica Lending’s Chief Credit Officer, Jackie Toenes lends her considerable expertise in explaining the 5 Cs of Credit and how they apply to land lending below.

The 5 Cs Explained

When considering a land loan, lenders will look at a farm or ranch’s:

Character: borrower’s reputation and standing in the local ag community.

Capital: borrower’s personal investment in the ag operation.

Capacity: borrower’s ability to repay the loan based on current income and debt.

Collateral: property or large assets used to secure the loan.

Conditions: factors such as the interest rate and purpose of the loan.

These five factors help the land lenders determine a borrower’s risk for defaulting on a land loan. The better or stronger an agribusiness’s 5 Cs, the lower their risk of default, and the more likely they will be approved for a loan.

Q&A with Jackie Toenes

Q: When considering a loan application, how do the “Cs” appJackie Toenesly in terms of what AgAmerica is looking for in a borrower?

Jackie: Our predominant focus is on collateral, specifically agricultural land (50 acres and up) – farms, ranches, recreational properties, timberland, and even future development land are all considered. Hand in hand with collateral is capital; our ideal borrowers do need to have equity in their land. Character is probably the second most important to us. We like to really get to know our borrowers and who they are; how they run their operations during good times and bad. How do they conduct their business affairs in the ups and downs?

We do also consider capacity; however, we have a variety of lending products, so if a borrower is a little weaker in this category, AgAmerica usually can still work with the borrower to accomplish their goals.

Q: Which of the “Cs” does AgAmerica Lending deem the most important?

Jackie: Hands down, collateral. AgAmerica is unique in that we have a variety of lending platforms and products to accommodate borrowers at almost any point along the spectrum for the other 4 Cs. As long as the collateral is solid, we can generally provide a lending product to accomplish our borrower’s goals and dreams.

Q: Which of the “Cs” is open to interpretation by AgAmerica lending teams?

Jackie: Conditions. Once we are comfortable with the collateral, AgAmerica will take a global look at each loan, taking all of the C’s into consideration. Where other lenders look immediately to credit and capacity (often turning borrowers away), AgAmerica specializes in thinking outside the box. We can be creative in structuring tailored lending products for each borrower.

Q: How can agribusinesses improve the “Cs” of their operations to be more attractive to lenders?

Jackie: Be proactive! Many times borrowers get too far in debt for us to be able to help in any meaningful way. Stopping to evaluate you operation sooner rather than later can help. By contacting us sooner, we may be able to help cut financing costs and/or payments to ensure the long-term success of the operation.

Q: How does character factor in?

Jackie: Another important aspect is to maintain good character and good standing in your community. We will look into the background and history of each borrower. If we see someone who has a history of not paying their creditors (regardless of circumstances), we are less inclined to move forward. However, we are very understanding of the ups and downs of farming and when borrowers have fallen on hard times. Good character will come through no matter the situation.

At AgAmerica Lending, we’re committed to finding unique solutions for our clients. As the country’s premier land loan specialists, we help agribusinesses big and small grow and prosper with our low interest rates, long amortizations, and an outstanding 10-year line of credit.




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